|
Difference between Credit Union and Bank
______________________________________________________________
Credit unions have fewer locations and are less common than banks. However, they offer services of a high quality. Usually, you can find best rate on loans, mortgage from them.
The Ownership A group of investors are the owners of a bank, and as such they are responsible for decisions regarding business policies and administration. This small group of investors also expects a certain return on their investments. The voting process will tend to maximize the ability of investors to make the most of money from customers. Customers generally have no voice in operation of the bank. Conversely, credit unions are owned by their members and the decision making board members are volunteers that give of their time on behalf of other members. Any person who "deposits" money in a credit union becomes a member of the credit union, not "customer of the credit union", his deposit is considered his share of the ownership. Each member of the credit union can vote on the policy. The outcome tends to benefit the members themselves.
Who can become members? Banks do whatever they can to get as many people as possible. This process helps banks build an ever growing customer base, but the people who sign up for accounts do not always decide to stay with the bank. Credit unions, however, cannot be joined without first meeting some sort of prerequisite for becoming a customer. These can include factors like professions, religion, workplace, geography, and civic affiliation. By keeping the total number of members low, credit unions can provide better, more personalized customer service.
The real Interest Banks do what they can to attract new customers, but their real loyalty belongs to the investors in charge of the bank's care. This is why their customer service often waxes at the time you open new account but wanes quickly. Customers of credit unions are also making the business decisions for the company, so the customer service is traditionally better. To keep future interest rates on credit cards and loans low, money that exceeds the running costs of a credit union is used to maintain interest rates on money market accounts, savings accounts, and CD's as high as possible.
Organization Banks are for profit private company, only the investors can have the dividend and appreciation of the share price. Credit unions are not-for-profit organization. After all the operation expenses are taken out and reserves are met, surplus earnings are returned to members. Member will get higher dividends, lower loan rates or free services. Saving is passed back to members at the end.
Safety of your money Any money being stored in a bank is guaranteed to be there by the Federal Deposit Insurance Corporation (FDIC) and this guarantee is displayed at each and every bank. Credit Unions follow a similar process and are 100% secure, but the Credit Union National Association (CUNA) is the organization backing them up. In this aspect, there is no much difference between Credit Union and Bank.
The Final Difference in front of market crisis, Banks are getting into trouble right now since their investors are greedy and stretch themselves too thin in the past few years, as comparing to few credit unions running into trouble as of this writing, Oct 2008. In the face of credit crunch, bank is reluctant to loan money to new customers since their investors thinking the risk of sour loan is high. However, one can still find the best loan deals from credit union if you are one of their members. Credit Union still works for you.
|
